Congress eyes 'site-neutral' pay bills for lame-duck session

Lawmakers return to the Capitol on Wednesday for their first full day of work since the elections. They face a long list of lingering healthcare priorities that have stalled for much of the 118th Congress.

One of the top issues during the lame-duck session is whether Congress will pass so-called site-neutral payment rules for outpatient care, primarily for hospitals under Medicare but possibly for the commercial market, as well. These bills would ban or limit extra charges hospitals levy for outpatient services.

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Medicare regulations generally allow health systems to charge more for outpatient services dispensed at off-site locations. Hospitals generate additional revenue by adding facility fees, which other providers such as physicians and ambulatory surgical centers do not.

Health systems justify the added cost as necessary to cover their greater overhead and as a reflection of the more comprehensive services and safeguards hospitals offer.

But Congress has increasingly taken note as hospitals acquire more outpatient providers, driving up Medicare expenditures. The Medicare Payment Advisory Commission, which counsels Congress on policy, has recommended for years that it should enact site-neutral payments for the program.

President Joe Biden has not embraced site-neutral payment rules, whereas President Donald Trump and President Barack Obama attempted to regulate them in the face of opposition from the hospital sector.

Crucially for Congress, proposals to curb facility fees would reduce federal spending, making them attractive to lawmakers who want to increase spending in other areas or reduce taxes. The Congressional Budget Office projects that the most robust site-neutral legislation would save more than $100 billion over 10 years.

Hospitals have consistently and aggressively pushed back. They cite costs and argue that site-neutral Medicare reimbursement policy would hamper access to care.

Some Democrats and allied advocacy groups make similar claims, and mostly they've been successful in limiting site-neutrality rules to the modest measures in the Bipartisan Budget Act of 2015, which apply to very few off-site locations.

Over the two years of the current Congress, however, the prospect of saving billions of dollars a year by implementing tougher site-neutrality rules has been an eye-catcher for Republicans and many Democrats.

The elections and site-neutral payment

Analysts looking at the post-election landscape, in which President-elect Trump's Republicans are poised to control the White House and Congress, see a chance of site-neutral payments legislation advancing during the lame-duck session.

The odds may be even higher under a unified GOP Congress next year as the majority looks to extend the tax cuts Trump implemented in 2017, which expire at the end of 2025.

Spending cuts would reduce the deficit impact of renewing the lower taxes on corporations and wealthy households. In that context, Democratic and hospital industry objections to site-neutral payment policy may be easy for Republicans to disregard.

"Site-neutral can produce some savings — like big savings, like billions of dollars of savings," McDermott+ consultant and former GOP congressional aide Rodney Whitlock said during a webinar with reporters Friday. "Are Republicans going to really sit there and worry when Democrats are saying 'You're cutting Medicare, you're destroying Medicare as we know it,' when it's over site-neutral? I don't think they're going to be caring."

And while hospitals are a potent lobbying force on Capitol Hill, the health insurance industry has a powerful voice, as well, and is pressing hard for site-neutral payments.

David Merritt, senior vice president of external affairs at the Blue Cross Blue Shield Association, said the prospects were good, especially next year given the desire for budgetary offsets.

"We think that there's some progress. We think that there's some momentum," Merritt said. "Once we get back in January, we know that they're going to be looking for solutions that save."

Still, exactly what passes and when is an open question.

Site-neutral payment bills

Lawmakers on both sides of the aisle had been eying the lame-duck session as an opportunity to move languishing bipartisan healthcare bills.

But with Republicans set to control all the levers of government in 2025, analysts predict Congress is more likely to leave bigger bills until new leaders can put their stamp on things, and tackle just the most basic and time-sensitive healthcare priorities, such as extending expiring programs for a few months.

If lawmakers move any site-neutral payments legislation this year, the most likely candidate is a relatively modest provision included in the bipartisan Lower Costs, More Transparency Act of 2023, which the House overwhelmingly approved last December.

That measure would require site-neutral payments for administering drug injections at off-campus outpatient departments, such as physician practices. The CBO estimates that would save about $4 billion over 10 years, making it a ready pay-for for short-term extensions.

Broader legislation is more likely to wait for the new year before it gets a serious look. That includes a major bill from House Budget Committee Chair Jodey Arrington (R-Texas).

This bill is similar to a Senate proposal that never advanced, the Site-based Invoicing and Transparency Enhancement Act of 2023, or SITE Act. Both focus on Medicare and target dozens of procedures commonly performed in off-site facilities.

Senate Health, Education, Labor and Pensions Committee Chair Bernie Sanders (I-Vt.) and Sen. Dr. Roger Marshall (R-Kan.) sponsored another measure that targets the commercial market, the Bipartisan Primary Care and Health Workforce Act of 2023. The bill, which the HELP Committee advanced in September, would prohibit hospital facility fees for certain outpatient services, including telehealth.

In September, the House Education and the Workforce Committee unanimously passed the Transparent Telehealth Bills Act of 2024, which would require site-neutral payments for telehealth services paid for by group health plans. It also would bar separate facility fees for telehealth when the providers can bill independently from health systems.

Since that bill and Arrington's version of the SITE Act are championed by Republicans who will be in control next year, they are likely to resurface, perhaps with revisions.

One indication of how the bills could be modified came recently with the release of a framework for site-neutral payments legislation shortly before Election Day from Sen. Maggie Hassan (D-N.H.) and HELP Committee ranking member Dr. Bill Cassidy (R-La.), who is likely to be the panel's chair when the Senate reconvenes with a Republican majority in January.

The Cassidy-Hassan plan is largely based on the SITE Act, which Hassan sponsored along with GOP Sens. John Kennedy (La.) and Mike Braun (Ind.), who will become governor of his home state in January.

A key change is that it would contain a reinvestment program aimed at helping rural and other cash-strapped hospitals rather than diverting all of its estimated 10-year, $140 billion in savings to other priorities.

Whatever bills do advance, this year or next, hospitals are going to put up a fight.

The American Hospital Association has been battling site-neutral payment policy for years and hammered Cassidy and Hassan's framework when it debuted.

Instead, the AHA urges Congress to consider higher Medicare reimbursements for hospitals and to rein in insurance companies. An AHA spokesperson asked about the current landscape pointed to a news release distributed about the Cassidy-Hassan proposal Nov. 1.

"Rather than addressing the root causes driving physician acquisitions, this framework instead proposes dramatic and untenable Medicare cuts, reducing seniors’ access to critical hospital-based care," the AHA said in the news release. "We urge Congress to address the true drivers of physician acquisitions, which include significant underpayments to providers and persistent delays and denials of care by commercial insurers."